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What is Microfinance in the Green Sector?

Hi, everyone!

Indri here from THINK Research Team ^^

Do you have any updated news from any sectors? Let me know in the comments :D

This week, I have watched Sudirman and Thomas & Uber Cup since the Indonesian team has played back to back matches from two big competitions. I love watching badminton and following all updates on this sport.

When watching this sports competition, I think about what kind of sustainable finance they apply to make sustainable competition and athlete development in many countries. I know sponsorship is the key. But if you live in Indonesia, you will know that badminton has been the key sport everywhere and like football, many kids play this sport in all Indonesian regions. Every day, since 2 pm, many kids at my housing complex will play badminton till 5 pm. They even don't use a racket and net. They use a book, a small piece of thin wood, or an exam board. They play in their front yard or their neighbour's front yard. They don't apply the proper rule with lines, but they know the rule of getting the point. So, they have skill, awareness, and understanding. Those are important to develop any technology, business, or practice.

(Kumparan, 2019)

Massive implementation is the key. But we need a long process to achieve that.

So, let's talk about the green sector. What is the green sector?

The green sector is characterised by several areas, such as reduction in CO2, clean energies, treatment of waste and wastewater management, green building, more sustainable use of agriculture, renewable energies, fisheries and forests (Federico Salvatelli, 2014).

So, microfinance in the green sector means any systems that can help implement this sector (practices and technologies) at a multi-scale. So, a flexible scale will be the key.

(OVB, 2018)

A good microfinance system will help any technologies to enter and dominate the market. Talking about the market, there are three indicators in market development (CGAP, 2017):

  • Supply indicators

  • Demand indicators

  • Enabling environment

On the other hand, in market development theory, there are some stages to implement the technology massively (Energypedia, 2021):

  • Pre-commercial (phase 0)

  • Pioneering (phase 1)

  • Expansion (phase 2)

  • Maturity (phase 3)

  • Saturation (phase 4)

  • Degeneration (phase 5)

Furthermore, microfinance will have a key role to accelerate the transition between phases. This system will depend on some components, such as policies, regulations, technology readiness, supply and demand. I did some techno-economic feasibility studies in renewable energy implementation. NPV (Net Present Value) and payback period will be calculated. The payback period means the amount of time needed to get the investment cost back. However, to calculate those parameters, there are many components to be considered, such as subsidy, rebate, and incentive. Also, it will depend on what kind of electricity system is in that region.

I will stop here and continue on my next blog. My question is, could you mention one specific example in the green sector?

Thank you for reading :D

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